Financial summary charts

Reported revenue growth of 7.4% reflected the strength of sterling, primarily against the US dollar. On a constant currency basis, revenues were up over 8% and, on a like-for-like basis, revenues were up over 5% and gross margin up almost 6%.

Headline PBIT margin was 14.3% in 2011 against 13.2% in 2010. Headline PBIT was up 16.3% to £1,429 million.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

Diluted headline earnings per share was up over 19% to a record 67.7p. Dividends were up over 38% to 24.6p per share – an all-time high.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

After-tax return on average capital employed rose to 11.3%, with the weighted average cost of capital falling to 6.1%.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

WPP out-performed the FTSE 100 Index and continued to do well against its competitors.

1

The calculation of ‘headline’ measurements of performance (including headline EBITDA, headline PBIT and headline earnings) is shown in note 31 of the financial statements.

2

Calculated gross of goodwill and using profit after taxation before goodwill impairment and other goodwill write-downs, revaluation of financial instruments, amortisation and impairment of acquired intangible assets, share of exceptional losses/gains of associates, costs incurred in 2008 in changing the corporate structure of the Group and investment gains/losses and write-downs, and adjusted to reflect taxes and net finance costs paid.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

Net debt averaged £2.8 billion in 2011, down £0.2 billion at 2011 exchange rates. The average net debt to headline EBITDA ratio has improved to 1.7 times, well within the Group’s current target range of 1.5 to 2.0 times.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

The Group continues to work to achieve continuity and flexibility of funding. Undrawn committed borrowing facilities are maintained in excess of peak net-borrowing levels and debt maturities are monitored closely.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

Markets outside North America now account for over 66% of our revenues, up from 62% five years ago. The influence of the faster-growing markets outside North America is increasing rapidly.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

All regions showed good growth with the strongest performance in Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe. Western Continental Europe remains affected by the Eurozone debt crisis.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

Marketing services comprised almost 60% of our revenues in 2011, a similar proportion to 2010. We are no longer an advertising agency, we really are a communications services company.

2011 headline PBIT1,2 by sector %

Sector

Percentage

Advertising and Media Investment Management

46

Consumer Insight

19

Public Relations & Public Affairs

11

Branding & Identity, Healthcare and Specialist Communications

24

PBIT contributions were broadly in line with revenues, with all sectors showing improvement in reported operating margins.

1

Percentages are calculated on a constant currency basis. See definition in the Financial glossary.

2

The calculation of headline PBIT is set out in note 31 of the financial statements.

3

The calculation of headline EBITDA is set out in note 31 of the financial statements.

4

Includes corporate bonds, convertible bonds and bank loans payable at par value, excluding any redemption premium due, by due date.